Question

Discuss the potential merits of housing subsidies granted by government to poor SA households in general and evaluate their economic impact using a diagram (graph). 12 marks

Answer 1

Ans.

When housing suppliers can't react to increase in price by supplying all the more housing, for example because of a restricted supply of very much associated land,, the supply curve S rises upwards steeply. This is alluded to as an inelastic supply reaction to price rises.
At the point when a demand-side endowment acts to move the demand curve from D1 to D2, the housing market equilibrium moves from direct A toward point B. The primary impact of the demand-side appropriation is in this way an expansion in cost instead of an expansion in the amount of housing conveyed. The cost rise converts into expanded benefits for housing providers.

S B. Price of housing D2 D1 Quantity of housing delivered